Ex-Harvey official made secret recordings for prosecutors in bribery investigation, unsealed documents show

Jose M. Osorio / Chicago Tribune

Then-Dixmoor Mayor Donald Luster presides over a City Council meeting in 2004. Luster is under FBI scrutiny related to his consultation work with Harvey Mayor Eric Kellogg.

Then-Dixmoor Mayor Donald Luster presides over a City Council meeting in 2004. Luster is under FBI scrutiny related to his consultation work with Harvey Mayor Eric Kellogg. (Jose M. Osorio / Chicago Tribune)

Gregory Pratt, Jason MeisnerChicago Tribune

The FBI is investigating allegations that a key consultant to Harvey Mayor Eric Kellogg demanded tens of thousands of dollars in kickbacks from developers to win city approval in a string of real estate deals, federal court records unsealed Wednesday show.

At the center of the investigation is a series of secret recordings made by a now-deceased Harvey comptroller, Joseph Letke, who recorded conversations with officials, including Donald Luster — a consultant to the city given influence over economic development by Kellogg. Luster said he could fast-track projects if given bribes, according to an affidavit filed in court for a search warrant.

The FBI warrant notes Letke, who is not referred to in the documents by name but as a “confidential human source,” was cooperating with the FBI in its investigation of city corruption. The Tribune is identifying that source as Letke because the affidavit refers to his former position as comptroller and his 2016 suicide.

On the recordings, Luster and Letke discussed bribery schemes involving a local grocery store, real estate and other businesses in the financially strapped suburb, according to the affidavit.

Luster is a twice-convicted felon and former mayor of Dixmoor who considers himself a minister and was already paid more than $100,000 a year by Kellogg’s administration as an economic development consultant, according to the affidavit. But Luster wanted more, according to the affidavit.

The FBI alleged there’s probable cause to believe Luster “required private developers to hire him as a consultant for the same development work for which Luster was being paid by the city.” He then solicited these developers to pay him bribes “that were thinly concealed as consultant fees,” according to the affidavit.

In exchange for the bribes, Luster took official action or caused Kellogg or other Harvey officials to take official action with respect to development projects in Harvey, the affidavit alleges. Despite being paid substantial amounts by Harvey to consult on development, he “caused development projects to succeed only if private developers paid him bribes,” according to the affidavit.

Letke’s recordings captured south suburban businessman Ron Finlay discussing a development deal and bribes involving a property Finlay wanted to make a paintball park, the affidavit alleged.

On the recordings, Luster and Finlay discussed the possibility of the city taking the property sought by Finlay and giving it to him due to unpaid taxes.

“Say we get ’em done, we get ’em washed, although it can be done, they don’t do it for everybody,” Luster said, the documents show.

Finlay replied, “I’m gonna imagine your influence and persuasion is no different than mine in Markham,” according to the documents.

Luster replied, “Pretty much,” the affidavit alleged. Former Markham Mayor David Webb has pleaded guilty to accepting bribes, but those accusations did not involve Finlay.

Reached for comment, Luster denied any wrongdoing and any involvement with bribes and said he has no influence on the mayor “at all. None whatsoever.”

Sean Howard, a spokesman for the city, did not respond to calls for comment. The Harvey Law Department later sent a statement saying the city had not seen the allegations but that Mayor Kellogg “will fully cooperate.”

Finlay has been listed as the owner and general manager of a Markham nightclub known for violence that received nearly $1 million in taxpayer funds from Markham. He was also the landlord for a strip club that has also seen numerous shootings in the same city.

Reached by telephone, Finlay declined to comment. Asked if he had an attorney representing him in the matter, Finlay said, “No I’ve done nothing wrong,” then hung up. He has not been charged with a crime.

After Letke killed himself in 2016, the FBI affidavit alleged, investigators have not seen any action on the property Finlay and Luster discussed. The affidavit said it appears Luster may have been tipped off to the investigation after the suicide by someone who knew Letke.

It’s not the first time the FBI has taken a keen interest in the Kellogg administration.

The Tribune previously documented how an undercover FBI agent, posing as a strip club manager, funneled $140,000 into a political fund that supported Kellogg in a probe that led to no charges against Kellogg. The FBI and U.S. Securities and Exchange Commission also probed an insider deal, exposed by the Tribune, that enriched Letke, surrounding a dubious and failed taxpayer-funded redevelopment of an old truckers motel near a strip club that the SEC called a "scheme."

The mayor is now banned for life from taking part in any bond borrowing deal. Kellogg has repeatedly invoked his Fifth Amendment right to not answer questions under oath about the deal out of fear the answers could be used to prosecute him. Letke did the same, and stopped working for Harvey.

The FBI said Letke began wearing a wire in the hopes of getting a lessened sentence for previous crimes for which he expected he would be prosecuted.